HFC Workshop India

Tom Catania Vice President Government RelationsWhirlpool CorporationFebruary 2011

2

Why is Whirlpool still using HFCs in USA?

- Cost of transition- Energy efficiency advantages of HFC 245fa trumps GWP impact

- Cheapest and least consumer utility compromise for achieving high efficiency- HFCs can be used responsibly and recovered

- HCs still are subject to VOC emissions rules- Even modest litigation risk in USA when using isobutane refrigerant in a no-frost

refrigerator can not be taken lightly in the US litigation, class action environment

- Most importantly, new chemicals/technologies on short term horizon that may have positive characteristics of HFCs without the negatives of HCs or HFCs

- “RETOOLING FATIGUE”

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Simple Message: TEWI (Total Environmental Warming Impact)

The “Use” Phase of a long lived residential refrigerator and the power plant emissions associated with that use has a more significant environmental impact than the manufacturing phase or end of life—especially if the refrigerants and blowing agents are responsibly managed and recovered.

The ideal combination of refrigerants and blowing agents in residential refrigerators would have zero ODP, very low GWP, low toxicity, be safe AND BE ABLE TO DELIVER THE HIGHEST POSSIBLE LEVEL OF ENERGY EFFICIENCY AT THE LOWEST POSSIBLE COST OR COMPROMISE OF CONSUMER UTILITY

HYDROCARBON FOAM INSULATION AND BLOWING AGENTS MAY NOT BE THE BEST/LAST ANSWER

Refrigeration manufacturers have “retooling fatigue.” - CFCs-HCFCs-HFCs-HCs-HFOs-?- continuous retoolings steal capital from investment in new environmental breakthroughs in the important areas of energy efficiency and smart products on smart grids, for example

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HC

Foam HFC / HCFC / NEW TECHNOLOGY?

High

GWP Energy

ODP GWP ENERGY EFFICIENCY

CFC

HCFC

HFC

HFO

HFC

HCFC

CFC

HC

HFO

HFO

HCFC

HFCCFC

Zero High Low Best Worst

HC

Ideal Equation for longer run would be 0 ODP , Low GWP , High Energy Efficiency

Foaming agents used today have element’s of all 3 , but not all the best characteristics

Managing proper disposal & usage of VOC’s ( Hydrocarbons ) during service , transport etc

HFC’s have been used extensively , however have a high GWP impacting the environment

HFO’s to provide the best new solution moving forward for energy & environmental benefits

Ideal Opportunity

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GDP / GROWTH / PENETRATION / POTENTIAL – India Case

Refrigerators are a ~6.2 mn units industry, growing aggressively YOYCurrently, only 14% of the market is penetrated, expected to grow to 25% by 2015

Most of the Indian market is Direct Cool (78%)DC market is growing faster than the Frost Free market,

driving refrigerator penetration in India

Growth of low income purchasers and total volume requires solutions that don’t drive the wrong behavior

CAGR 11.5%

CAGR 8%

India’s Economic Prosperity

Indian Consumer’s buying potential

Higher sales of refrigerators ( e.g. DC ) products

on the market

Need to make the right selection of Blowing Agents and

refrigerants with the broader & longer environmental picture in

mind

+

=

Potential Equation

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Providing value to the masses

Entry-level consumers for both Direct Cool and No Frost are extremely price-conscious, seeking ‘value for money’

Energy efficiency / Eco moved up from 8th to 4th place in importance in purchasing an appliance (behind brand, price & color)

HC’s significantly increase the GWP effect on the environment moving forward Early tests not in optimized refrigerator and assumes full venting of HFCs

Consumers Understand Energy Efficiency, not GWP… Continue To Seek ‘Value’

Direct Cool sales in INR No Frost sales in INR

BULK SALES ON ENTRY LEVEL

PRICES POINTSSource : DuPont

HFO HFC - 245 HC HFC - 134

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Risk of converting too early?

HIGH ODP LOW GWP ZERO ODP ZERO ODP . LOW GWP , ENERGY EFFICIENCY

CFC HCFC

HFC

HC

BLENDS

HFO

Manufacturer’s globally as well as in India to comply with global regulations for material usage ( HFC etc )

Every step requires a large investment from a manufacturer that affects product cost , design etc o Investments need to be recouped from sales resulting in possible price increases

Unique situation in India as compared to mid 1990’s CFC phase outo Energy Regulations are very stringent from 2012 – 2014 ( 60% jump )o Environmental regulations force manufacturers to comply for chemical phase out

SHOULD NOT FORCE THE USE OF A CHEMICAL RATHER SUPPORT THE DEVELOPMENT OF THE RIGHT CHOICE FOR THE ENVIRONMENT

Ideal Opportunity

3-4 years until mass

production ( est. 2014 / 15)

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Impact on the Indian energy grid

Analysis of the impact of energy standard changes on the overall energy consumption

Note: Illustrative calculations only, qualitatively correct; Market penetration & growth have been factored in

-

500.00

1,000.00

1,500.00

2,000.00

2,500.00

3,000.00

2010 2012 2014

Average energy-star purchases continue at today's levels

Average energy-star purchases change in line with plan (20% in 2012 & 40% in 2014)

Indi

an g

rid co

nsum

ption

(mil.

Kw

hr/y

r.)

Energy regulations impact on the Indian grid

Need to Promote Energy Efficiency & Eco Conscious Lifestyle for the Indian Consumer

Currently, on average, India’s average buying is ~3.7 energy efficiency level

If they move up by 20%, then overall energy consumption will come down (GREEN)

If average buying behavior does not change DUE TO COST, overall energy consumption will increase (RED)

Today

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Conclusion – India should not rush into a sub-optimum solution that limits potential “use phase” emission reductions*

Our Proposal for residential refrigerators: Modest delay (1-2 years) in HCFC phase outIndia could lead rest of the world in development and export of next generation solution

*Or has the unintended consequence of consumers trading down to less expensive, but less efficient models

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Thank you !

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Synergy between Energy Efficiency & TEWI

ENERGY

EFFICIENCY

ATMOSPHERIC

EFFECTS

KEY TAKEAWAY’S

ENERGY EFFICIENCY

20% JUMP IN 2012

40% JUMP IN 2014

RESPONSIBLE USE OF MATERIALS

2013 phase out for HCFC

Overall goal by Montreal Protocol to reduce carbon

emissions by 2030

INDIA FACED WITH CHALLENGES OVER THE NEXT FEW YEARS TO LOWER OVERALL ENERGY INTENSITY WHILE PHASING OUT HCFCS

RIGHT BALANCE NEEDS TO BE

ACHIEVED AND NOT MUTUALLY EXCLUSIVE

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TODAY’S LANDSCAPE BUT NEED TO LOOK FURTHER?

CFC

HCFC

HFCHC HFO

Time

Envi

ronm

enta

l Im

pact

Energy Benefits : Medium HighLow

No ideal BA found that has 0ODP , low GWP , and high

energy benefits

Use of HFC’s growing however still has a high

GWP

INNOVATION UNDER THIS SPACE TO PROVIDE MOST IDEAL BLOWING AGENT SOLUTION FOR THE ENVIRONMENT

Aim to drive right investment’s for an ideal blowing agent !

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Unique Issues to the Indian Market

Supply Base Impact if moved to a foam that impacted energy & environment:

o Use of High Efficiency components like VIP’s , VCC compressor’s to meet energy regulations 2012-2014o Diminishing return’s and high cost’s could potentially lead to higher product costo Consumer’s forced to purchase lower energy efficient producto These step’s would negate entire purpose of reducing energy & environmental impact in the country

Lack of Incentives for higher energy rated & environmentally friendly products

o Lack of incentives by the govt to drive higher sales of energy & environmentally friendly productso Manufacturers forced to comply to standards however unsure on consumer behavioro Funding opportunities present in multiple regions like Mexico ( e.g. UNIDO funding )

Infrastructure Concerns

o Servicing of VOC’so Incremental increase in material costs & import duties

Other?

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Opportunities for India

Infrastructure

Government & Manufacturers partnership in developing low cost components for the “World”o Foam ‘s , refrigerant’s , etc

Providing incentives for manufacturers to assist in the Indian government’s goal to help reduce energy efficiency & carbon emissions part of the 11th five year plan

o Incentivize use of high cost components like VIP’s VCC’s etc

Create an EPR framework for safe disposal of componentso Create awareness amongst Indian consumer for the need of supporting global cause

Look for opportunities beyond regulatory landscape that would help make “India a leader in this space”

o Partner with key leader’s in technology development in new areas like Smart Grid

Consumer Awareness

Creating an awareness for the need & value to purchase energy & environmentally friendly productso Promote the use of product’s with special consideration’s from govt & manufacturerso Tax credit’s / rebates for energy & eco friendly product’s